The fine line Canada must walk in Trump's America

Deep economic asymmetry means Canada has more to lose than its southern neighbours during the NAFTA renegotiations.

Forty per cent of Canada’s GDP is dependent on access to international markets, and 80 per cent of that is headed to a single market: the U.S. (Photo by Chris Connelly via Flickr, CC BY-NC-ND 2.0)

By DONNA McKINNON

As Canada entered into the North American Free Trade Agreement (NAFTA) re-negotiations with the United States and Mexico this morning, it’s not business as usual.

The deep economic asymmetry that exists between the two countries is an ongoing and historical source of anxiety for Canada, with no immediate remedy in sight, said UAlberta political scientist Greg Anderson. And weaning Canada off the American economy, he added, is a debate as old as confederation.

“Any change, even the tiniest ripple, has a big impact on the pocketbooks of Canadians,” said Anderson. “It’s a vulnerability that Canadian prime ministers and administrations going back to the very beginning have worried about, but have been unable to change.”

Canada’s dependence on trade

Forty per cent of Canada’s gross domestic product (GDP), which measures national income and output, is dependent on access to international markets, and 80 per cent of that is headed to a single market: the United States. Conversely, only about a quarter of the American economy is tied to international trade. Of that, the diversity of trading partners—of which Canada is the largest—in combination with the depth of their consumer market (300 million), largely insulates the United States from disruptions in trading relationships.

“One of the real challenges for all countries, not just Canada, is trying to figure out the coherent thread running through everything that Trump is doing,” he said. “It’s not just a typical hyper-nationalist, populist approach. Not only is he threatening to scrap trade agreements, he’s actually gone further and said he’s going to completely pull out of all of these arrangements. He’s challenging NAFTA, he’s challenging NATO.

“There’s more destructive intent than any kind of constructive change. The first thing he did when in office was get rid of the Trans-Pacific Partnership, which Canada was a part of. That’s what’s worrisome; it’s just about destruction.”

A delicate balance

Anderson said keeping borders open to legitimate traffic, cargo and the uninterrupted movement of people is a delicate balance of diplomacy and advocacy; a matter of protecting Canada’s national interests without compromising long-standing relationships. And yet, when Canada does get noticed in Washington, like during the recent softwood lumber dispute, it’s usually for the wrong reasons.

“Canada benefits from not having a big profile in Washington because the relationship is so deeply integrated. A lot of things happen without much notice, day in, day out,” he said. “If something gets to the president’s desk, that’s not a good thing usually, for any country.”

According to Anderson, provincial governments have been doing a lot of work in the states immediately adjacent to them as a kind of bulwark against the vagaries of federal politics. He cites the Alberta government’s membership in the Pacific NorthWest Economic Region and the routine attendance of Canadian premiers at Western Governors’ Association meetings as examples of cross-border relationship building.

“They’re doing their own sub-federal diplomacy to make people aware of each other,” he said. “It’s all good, but it’s also a slow boil. You don’t just start doing that and have an impact three days later. It’s a very slow process and nets results over a long period of time.”

As disorganization and impulsivity continue to permeate the White House, the pressure on other nations’ leaders, including Prime Minister Justin Trudeau, to fill the global leadership vacuum has become increasingly more urgent.

“Trudeau and Trump couldn’t be bigger contrasts in terms of what they represent,” said Anderson. “I would like to see Trudeau make a little more effort to be a global voice on trade liberalization, migration, climate change. In my view, he doesn’t quite have the bravado of his dad, nor the oratory skills, but I think he’s doing as well as anyone. He’s trying to find his way in a very chaotic period.”

Anderson will be speaking at the Faculty of Arts Alumni Weekend event: The Elephant in the Room: Canada-US Relations in the era of Trump, on Friday, Sept. 22 from 5 to 7 p.m. in the Wild Rose Room in Lister Centre. A question and answer period and reception will follow.